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Target Hair Color

Target Hair ColorCase Competition

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1. Nationally, the Boxed Hair Color business is declining.• Nationally: -1.3% during the last 52 weeks• Target: -2.1% during the last 52 weeks

2. Target has historically won in beauty categories but dollars are leaking to Salons, “e-Salons,” and the emerging Dollar Channel.

3. Target’s website capabilities have lagged those of its top competitors: Amazon.com and Walmart.com.

4. Additionally, Target is experiencing reduced store traffic due to the Holiday 2013 Credit Card Data Breach. Please refer to the attached Kantar article for more detail.

Total US Color sales declined 4% from 2011-13 Boomers leaving faster than Millennials entering; Leakage to Salon

Hair Color Background: State of the business

2013

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Hair Color Background: Declined guest count

•Dollar sales are driven by the following 4 buckets:

•During the latest 52 weeks, hair color guest count has been down -3% and is declining 3x faster than the total beauty category.

•If guest count continues to decline by -3%, total sales are also at serious risk of declining at an increased rate.

Guest Count

Trips/Guest

Units/TripAverage Retail Price

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Hair Color Background: Barriers to entry

1. Damaging Hair 2. Selecting Wrong Color 3. Inconvenience

“I’m afraid”

35% of people select wrong color“I’m overwhelmed”

Research has shown that the following are major barriers for the category:

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Hair Color Objective: Return the Category to Growth

•How would you help Target understand how to bring shoppers back into their hair color aisle?

•Thought starters on ways to impact the store: • Think about ways to leverage/enhance: (1)target.com (2) social media (3) mobile

apps (4)out-of-store marketing (5) in-store education/marketing/shelving

The clock is ticking and guest counts are continuing to decline due to: shifts to salon, “e-salon”, competitor activity, and shoppers simply no longer coloring their hair.

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Appendix: Target’s Guest Profile

• 40 years old• Household income of $65,000;

Over 33% above $75,000• 36% have children at home • 65% have pets at home• 57% completed college• 78% are women• 80% are married

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Appendix: Hair Color Shoppers

She quickly reaching her end results, not so much the means. With end color being her sole concern, she’s an ideal shopper to focus on increasing frequency.

She prioritizes perfect results before efficiency. She’s willing to put forth the effort to look her absolute best. Regimen is her best friend.

She wants the end result but also takes time to stop and smell the roses. She values the journey as much as the end result and is willing to try new products.

B

A

Sensorial SallyEfficient Emily Flawless Fiona

B

A

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Appendix: Hair Color & Non-Hair Color Shoppers

At-home Only Dualist Salon Only Non-Colorer0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

30% 30% 30%

40%

50%

60%55%

40%

20%10% 15% 20%

>5535-55<35

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

40%

25%

20%

15%

Dualists (Home & Sa-lon)Salon OnlyHome OnlyNon Colorers

Avg. Age 45 38 47 35

US

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Appendix: Hair Color’s Competitive Landscape

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Appendix: Target’s Competitive Landscape

Wal-Mart- “Save Money, Live Better”•Pro:• Value perception• Walmart.com platform

•Con:• Shopability of shelf is not best in class

Target- “Expect more pay less”•Pro:• In-store shopping experience• In-Store beauty concierge in 500 stores• Product differentiation with special packs

and in-aisle color wheel•Con: • Target.com• High price perception

Dollar General- “Save time. Save Money. Every day”•Pro: • Value perception• Relatively new to the market- room to grow

•Con:• Shopping experience• Limited selection

Salons-•Pro:• Trust in stylist selecting the right color• Perception of less damaging color• Convenience

•Con:• Price- can be > 10x more expensive than

boxed color

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Appendix: Guest Barriers

I forget or don't think about it

I'm too young to start coloring my hair

I don't know what product/shade to pick

I don't have any gray hair

Afraid it might damage my hair

Afraid of ruining my natural hair color

Barriers for Non-Users

I don't trust the result I may get from coloring at home

Shopping for hair color in the store is too confusing

I'm afraid of making a mistake

The color won't turn out even

I tend to procrastinate on coloring my har

It's hard to pick the right color that suites me

I don't like the look of re-growth at the rootsFrustrations of Current Colorers

Source: Ipsos 2013

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Appendix: Hair Color 101

Color Segmentation by LevelBased on the Color Length

1-3 WASHES

TEMPORARY

24 WASHES

DEMIPERMANENT

6-8 WASHES

SEMIPERMANENT

PERMANENT

PERMANENT PERMANENT

BLEACH

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Appendix: Hair Color 101

2 Black3 Dark Brown4 Medium Brown5 Light Brown6 Dark Blonde7 Medium Blonde8 Light Blonde9 Very Light Blonde10 Ivory11 Purely Blonde12 Special Blonde

/0 Natural Colour/0Χ Natural X/1 Ash /2 Mat /dull/3 Gold/4 copper and/or red/5 Mahogany, deep brown red/6 Violet/7 Chocolate (brown)/8 Pearl (silver)/9 Ash

Shade = Level & Tone(s)

Level Tone

10

Permanents can lighten non-colored hair up to 2 stages lighterHair lighteners and highlighting products up to 4 stages of lighteningGrey will show the tone you are adding. It has no colour itself and once dyed will look lighter and more vibrant.

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Stages of Lightening Hair

Dark

Brown

Medium

BrownLight

BrownDark

Blonde

Existing colorTone Descriptor Neutralises

1 Blue Ash Orange

2 Green Ash Red

3 Yellow Violet

4 Orange Blue

5 Red Green

6 Violet Yellow

Appendix: Hair Color 101